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London house prices jump 5.4%, locking out first time buyers

Asking prices for London homes reached another record this month as the winter lull in the market came to an end.

PHOTO: REUTERS

[LONDON] Asking prices for London homes reached another record this month as the winter lull in the market came to an end.

The 5.4 per cent monthly surge puts the average price at 643,843 pounds (S$1.31 million), property website operator Rightmove said. Inner London surged almost 8 per cent to 848,000 pounds. Nationally, prices rose 2.9 per cent in February from January.

The report also showed that new property listings nationally increased 5 per cent in the past year, with the number of smaller properties aimed at first-time buyers up 10 per cent.

But that appears to have done little to ease pressure in the London market and help those looking to get on the property ladder. Prices advanced in 23 of 32 boroughs in February and are up 11 per cent on the year.

In London's cheapest district, Barking & Dagenham, asking prices have soared 23 per cent to 291,638 pounds since early 2015. Simon Woodcock, managing director at estate agent Robinson Michael & Jackson, said that young Londoners struggling to save a deposit are turning to their parents, with many remortgaging their own homes to help.

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To help first-time buyers in the capital, the government announced measures in November, including interest-free loans worth as much as 40 per cent of the value of a newly built home as part of its Help-to-Buy program.

"Home-ownership plans for some are even further out of reach," said Rightmove director Miles Shipside.

With an income cap on the government scheme, the increase "takes the price of many properties out of reach for average earners in London."

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